European and African bunker prices have declined alongside Brent in most major ports, and prompt VLSFO availability has tightened in the ARA.
Changes on the day to 08.00 GMT today:
- VLSFO prices up in Gibraltar ($2/mt), and down in Rotterdam and Durban ($5/mt)
- LSMGO prices down in Gibraltar ($12/mt) and Rotterdam ($9/mt)
- HSFO prices down in Rotterdam ($9/mt), Gibraltar ($6/mt)
Gibraltar’s VLSFO prices has risen on the day, to widen it premium over Rotterdam by $7/mt to $19/mt. Gibraltar’s increase has also placed it $8/mt above Malta’s.
Prompt VLSFO availability has tightened with certain supplier in the ARA amid robust demand.
ARA’s fuel oil inventories have been drawn in the past week. 6.52 million bbls of fuel oil was stored independently in the bunkering hub yesterday, a 7% drop on the week. The inventories, which cover all fuel oil grades, are at their lowest point in three months.
Strong winds from the east could disrupt bunkering in most areas off Malta from Saturday evening. Bunkering Area 6 off Malta’s west coast is more sheltered from eastern winds and conditions could be more conducive to bunkering there.
Heavy swells could threaten suspensions to outer anchorage bunkering in Las Palmas until next Wednesday. Weather conditions are forecast to be calmer in Tenerife and Gibraltar Strait ports.
Three cruise ships called at Gibraltar in July and August, the first cruise traffic the port has seen since the pandemic began in March 2020. The Mediterranean cruise ship season was cut short by travel restrictions and persistent concerns about public gatherings once again this summer.
The number of cruise ships calling to bunker in Gibraltar hit 518 in August, a 5% increase from July, and a 23% gain from a year earlier, Gibraltar Port Authority data shows.
Brent
Front-front-month ICE Brent has declined by $0.53/bbl on the day, to $84.57/bbl at 08.00 GMT.
After rising to intraday highs of around $86/bbl yesterday, Brent is heading for its first weekly drop since early September. A market correction was expected based on indices pointing to overbought futures.
The yesterday’s sell-off, and “A few more days of range-trading will bring the overbought relative strength (RSIs) technical indicators firmly back in neutral territory,” OANDA analyst Jeffrey Halley says.
Some decline in coal and natural gas prices have also added downward pressure on Brent. Widespread shortages of natural gas across Europe and Asia, and a critical coal shortage in China, have spiked prices in recent weeks, and triggered power plants to source more fuel oil and diesel as feedstock. Power supply concerns linger as winter approaches in the northern hemisphere.
More attractive coal and gas prices could alleviate some of the built-up added pressure on oil stocks. Oil stocks were already under pressure from recovering global demand and unwillingness from OPEC+ to increase output above its current monthly phase-back schedule.
US shale oil production is forecast to increase by 77,000 b/d from October, to 8.22 million b/d in November, according to the Energy Information Administration (EIA). But this is unlikely to plug the global supply gap, which has been widening with recovering economic activity as Covid-19 lockdown restrictions have eased.